Finding Text
Criteria: In accordance with 2 CFR 200, indirect cost rates must be applied in accordance with the terms of the grant agreement. For the Education Stabilization Fund the Kentucky Department of Education approves the indirect cost rates as well as the methodology of determining indirect costs. Condition: The District made a material error when calculating the June 2022 indirect costs for the Education Stabilization Fund. The District used the correct indirect cost rate, however a formula error resulted in a material error that was not identified by the District?s internal controls. Cause: The District?s internal controls failed to identify the calculation for indirect costs was materially incorrect. Effect: The auditor proposed and the District posted an adjustment totaling $126,000 to decrease indirect costs for the Education Stabilization Fund. If the auditor had not identified the error, the District would have incorrectly requested federal funds totaling $126,000. Recommendation: We recommend the District review its internal controls related to its calculation of indirect costs for all programs. Management?s Response: The District will review on a periodic basis the alignment of indirect cost rates and the calculations being used to ensure accuracy.